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BEAN STOCK Sharing in Our Success

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Page 1: BEAN STOCKstarbucksbeanstock.com/wp-content/uploads/2015/11/SBUX_BeanStock... · 2 OVERVIEW To get the most out of your Bean Stock, it’s important you understand how Bean Stock

BEAN STOCKSharing in Our Success

Page 2: BEAN STOCKstarbucksbeanstock.com/wp-content/uploads/2015/11/SBUX_BeanStock... · 2 OVERVIEW To get the most out of your Bean Stock, it’s important you understand how Bean Stock

WHAT’S INSIDE

1. Introduction

2. Overview

3. Bean Stock Eligibility

4. The Value of your Bean Stock

5. How Stock Price Impacts Your Bean Stock

6. Your Fidelity Account

7. Taxes

8. If You Leave Starbucks

9. Questions

10. Glossary

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BEAN STOCK REWARDS PARTNERS

We are proud to offer Bean Stock to partners around the world.

Created in 1991, Bean Stock is an opportunity for partners to share in the financial success of the company through shares of Starbucks stock — it’s why we are called partners. We continue that long history of investing in you with this year’s Bean Stock grant.

As partners and shareholders, we fully recognize that Starbucks current successes are due to your ongoing commitment to deliver extraordinary moments of connection in our stores and in the communities we serve.

Thank you for all that you do.

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OVERVIEW

To get the most out of your Bean Stock, it’s important you understand how Bean Stock works, how you’ll receive value, and what to expect.

Bean Stock is granted to eligible partners in November, subject to approval by Starbucks Board of Directors each year. If you are eligible, you will receive Bean Stock in the form of Restricted Stock Units (RSUs), which turns into shares of Starbucks stock after a specific period of time has passed. This waiting period is called vesting.

Simply put, if you stay employed by Starbucks for at least one year from the grant date with no breaks in service, you’ll receive the first 50% of your Bean Stock. If you remain employed two years from the grant date, you’ll receive the remaining 50%. Once you own the shares, you can hold or sell them. It’s up to you!

Read on to understand how this works.

For every one RSU, you get one share of Starbucks stock.

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BEAN STOCK ELIGIBILITY

There is no need to enroll in Bean Stock.

You are eligible if you:

• Are hired by Starbucks as of May 1 of the fiscal year preceding the grant date, AND• Are in a position up to, but not including the director level.

There is no longer an eligibility requirement for partners in Brazil, Canada, China, Costa Rica, Puerto Rico, Singapore, Switzerland, Thailand and the United States to be paid at least 360 hours during the fiscal year.

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THE VALUE OF YOUR BEAN STOCK

When we talk about value, we’re referring to economic value, which is an estimate of what your Bean Stock is worth at grant.

Each year, Starbucks Board of Directors evaluates our company performance and takes into consideration our strategic and financial goals for the coming year to determine the economic values for that year’s Bean Stock grant.

The value of your Bean Stock is based on job for retail partners and annualized salary for non-retail partners.

• For retail partners (barista through district manager), Starbucks determines theeconomic value of your Bean Stock based on the job you hold on the last day ofthe fiscal year.

• For non-retail partners, Starbucks determines the economic value based on yourannualized salary as of the last day of the fiscal year.

If you are promoted, the economic value you receive may increase with each step up.

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HOW STOCK PRICE IMPACTS YOUR BEAN STOCK

At Grant

At grant, the value of your Bean Stock is determined by your job or annualized salary, but the number of RSUs you receive will depend on Starbucks closing stock price on the date of the grant. To calculate the number of RSUs, take the value of your Bean Stock and divide it by the closing price of Starbucks stock on the grant date.

EXAMPLE: RSU Grant CalculationThis example is for illustrative purposes only.

Let’s say that the economic value of your Bean Stock is $500 and the closing price of Starbucks stock on the grant date is $52. $500 ÷ $52 = 9.6 RSUs Your grant would be 10 RSUs*

*All RSUs granted will be rounded up to the nearest share

You can also see in the examples below that the stock price impacts the number of RSUs you receive, but it does not change the value on the date of grant. That’s why the number of RSUs you receive each year may vary when the grant value has remained relatively constant.

EXAMPLE: How Stock Price Affects Number of RSUsThis example is for illustrative purposes only.

Let’s say the economic value of your Bean Stock grant is $500.If stock price = $50 $500 ÷ $50 = Your grant would be 10 RSUsIf stock price = $100 $500 ÷ $100 = Your grant would be 5 RSUsYou have a different number of RSUs granted, but the value is the same.

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At Vest

When Bean Stock vests, the value of the shares you receive is based on Starbucks closing stock price on the vest date. This is how your gain (taxable income) is determined.

EXAMPLE: VestingThis example is for illustrative purposes only.

Let’s say you received 10 RSUs on the grant date. As long as you remain a partner, 50% or 5 RSUs will vest on the first anniversary of the grant date. And on the second anniversary of the grant date, the remaining 5 RSUs vest for a combined total of 10 RSUs. If the closing prices on the vest dates are $60 and $65 respectively, your total gain (taxable income) before taxes is $625.

Vest DateNumber of

RSUs VestedClosing Price on Vest Date (USD)

Your Gain or Taxable Income (USD)

1st Anniversary of Grant Date 5 x $60 = $300

2nd Anniversary of Grant Date 5 x $65 = $325

Totals 10 $625 (before taxes)

See the Tax section for more detail on taxation.

You can follow Starbucks stock price on the NASDAQ stock exchange under the trading symbol SBUX .

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* If you don’t activate your Fidelity stock plan account and complete your tax certification form, which is part of the activation process, this may impact therelease of your shares and could result in additional tax withholding.

**Note on currency conversion: If you wish to withdraw cash proceeds from your Fidelity account, currency conversion is an optional service offered. If you choose not to use Fidelity for your currency conversion, you can wire proceeds out in U.S. dollars and convert them at another institution (if allowed by your country or bank). Please note that exchange rates and transaction times may vary over time. You are encouraged to review and compare rates to ensure you receive the best rate possible. If you have questions regarding currency conversion, please contact Fidelity. You may also incur fees from your financial institution.

YOUR FIDELITY ACCOUNT

Fidelity Stock Plan Services (Fidelity) is Starbucks dedicated provider of recordkeeping and administrative services for our stock plans.

When you receive a Bean Stock grant, you will automatically be set-up with a Fidelity stock plan account. You will need to activate your account* at netbenefits.com to manage and view your Bean Stock.

Log in to your account to:

• View your account balance• Accept your grant• Sell shares• Transfer proceeds to your bank account**• Access your stock plan documents• Access your transaction information and account statements

Reminder: Always keep your address current with Starbucks, so you receive important information on a timely basis.

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* The example shows estimated tax withholding. For your own personal situation, we encourage all partners to consult with their own tax adviser with respect to local tax consequences in regards to taxation of RSUs at the time of vest.

** Shares will be rounded up to the nearest whole share, and any residual from the netting of shares will be refunded to you through payroll.

TAXES

When your Bean Stock vests, you may be required to pay income tax on the market value of the shares you receive.

If taxes are due, depending on where you work and/or live, Starbucks will withhold taxes by reducing the number of vested shares equal to the amount of tax you owe. This is referred to as netting of shares. The remaining shares will be deposited in your Fidelity account shortly after the vest date.

EXAMPLE: Tax-WithholdingThis example is for illustrative purposes only.

Let’s say you received 10 RSUs. One year later, the first 50% (5 units) vest.

vested shares unvested RSUs

If the closing price is $60 on the vest date, your gain (taxable income) would be $300. 5 shares x $60 = $300

If your tax rate is 35%*, the tax due would be $105. $300 x 35% = $105

Two shares** would be used to cover the taxes due and the remaining three shares would be deposited into your Fidelity account.

Fidelity Account

Taxes

3 shares x $60 = $180If you hold these shares, the value

in your account may go up or down depending on Starbucks stock price.

2 shares x $60 = $120Since only $105 was due, you would get $15 back

through your next paycheck.

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At vesting, Starbucks is responsible for reporting the taxable income to the tax authorities. The taxable income will also be reported through payroll, and the amount of tax withheld in shares will be detailed on your pay statement.

Partners who have been granted Bean Stock while employed by Starbucks in other countries may have additional taxes that need to be withheld through local payroll at the time of vesting.

Visit starbucksbeanstock.com for more information on taxation.

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*Note: If you received Bean Stock RSUs in China in 2014 or later, all your vested RSUs will be subjected to forced sale at separation.

IF YOU LEAVE STARBUCKS

The charts below explain what happens to your Bean Stock if you no longer work at Starbucks. Your experience will vary depending on your situation and when you received your Bean Stock.

Bean Stock RSUs granted in 2010 or later

Situation:• You voluntarily leave Starbucks or are separated for reason other than misconduct

or retirement, or• You involuntarily leave Starbucks for misconduct, or• You retire at age 55 or greater and have 10 years or more of credited service, or• You are no longer an active Starbucks partner due to permanent and total disability

All vested RSUs that were converted to actual shares are yours. You determine when to sell these shares.* There is no time limit. All unvested RSUs are forfeited.

Situation: Your death. All vested RSUs converted to actual shares and in your account will go to your estate. Your estate will determine when to sell these shares. There is no time limit.

All unvested RSUs are forfeited.

Bean Stock Stock Options granted in 2009 or earlier

Situation: You voluntarily leave Starbucks or are separated for reason other than misconduct or retirement.

You have 90 days from your last day of employment to exercise your vested stock options.

All unvested stock options are forfeited.

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*Note: Partners in Austria, France, Germany, Ireland, Netherlands or the United Kingdom who received stock option grants under the EU Sub-Plan are not eligible for this retirement provision as it is considered discriminatory.

Situation: You involuntarily leave Starbucks for misconduct. You may forfeit all vested stock options upon your separation. All unvested stock options are forfeited.

Situation: You retire at age 55 or greater and have 10 years or more of credited service.*

You have 36 months to exercise your vested stock options. All unvested stock options are vested.

Situation: You are no longer an active Starbucks partner due to permanent and total disability.

You have 12 calendar months from your last day of employment to exercise your vested stock options.

All unvested stock options are forfeited.

Situation: Your death. Your estate has 12 calendar months from your death to exercise your vested stock options.

All unvested stock options are vested.

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QUESTIONS

For any questions about your Bean Stock, including plan information, account activation, grant acceptance or selling shares:

• Visit netbenefits.com, or• Talk with a Fidelity Representative

» U.S. Partners call Fidelity at (866) 697-1048 » International Partners call Fidelity toll-free by dialing your country specific access

number and then dial +1 (800) 544-0275 when prompted.

Fidelity Representatives are available from 2 p.m. Sunday through 9 p.m. Friday (PST).

Interpreters are available upon request.

For general information:

• Go to starbucksbeanstock.com• Talk to your manager or Partner Resources generalist• Email Stock Administration at [email protected]

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GLOSSARY

Annualized Salary In general, for hourly non-retail partners, your annualized salary is determined by taking your hourly rate equivalent and converting it to an annual salary as of the last day of the fiscal year. For salaried non-retail partners, your Bean Stock reward is based on your annual salary as of the last day of the fiscal year.

Closing PriceClosing price refers to the closing price of Starbucks common stock, as reported on the NASDAQ stock exchange.

Economic ValueThe economic value is derived using a common financial reporting methodology to estimate the current value of Restricted Stock Units (RSUs) based on several assumptions, including the closing price of Starbucks stock on the grant date, the anticipated value at future vest dates, and the changes in Starbucks stock price. Essentially, it is the present value of potential future gains over the vesting period of the RSU. Each year we use economic value to establish a set of guidelines by which we determine the number of shares rewarded (in the form of an RSU).

Fiscal YearA fiscal year is the 12-month period used for accounting purposes. Starbucks fiscal year starts on the Monday following the Sunday closest to September 30, and ends on the Sunday closest to September 30 the following year.

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Grant DateThe date on which Starbucks grants equity rewards like RSUs and stock options. This date marks the start of your vesting schedule.

Netting of SharesThe tax-withholding process where the total number of shares deposited into the Fidelity Account is reduced by the number of shares equal to the amount of income tax you owe.

Restricted Stock Units (RSUs)A Restricted Stock Unit, or RSU, is the right to receive a specified number of shares of Starbucks stock upon satisfaction of the vesting criteria.

Shares of StockThe terms “share” and “stock” are often used interchangeably. A share of stock is an individual share of ownership in a company. When you purchase shares of Starbucks stock, you become a shareholder—or part owner—in the company. As a shareholder you have the right to vote on important company issues, such as who serves on the Board of Directors.

VestingThe time period that gives you the right to receive a specified number of shares of Starbucks stock. When a portion of your RSU has vested, you own the shares outright. Vesting will generally occur on the anniversary date of the RSU grant.

This brochure highlights the terms of “Starbucks 2005 Company-Wide Sub-Plan to the 2005 Long-Term Equity Incentive Plan”. If a discrepancy should arise between this information and the official plan documents including your award agreement, the official plan documents govern in all cases. The Company reserves the right at its discretion with or without notice to review, change, amend or cancel the plan at any time. The language in this brochure does not constitute a guarantee of employment. Nor does any of the material in this brochure itself in any way constitute a contract of employment or a contract to continue to offer the plan described herein.

© 2015 Starbucks Coffee Company. All rights reserved